National’s long-awaited changes to the Employment Relations Act passed their third reading on 30 October 2014 and will receive Royal assent later this week. Employers will now have 4 months to grapple with the changes until the Employment Relations Amendment Act 2013 comes into effect. In this article we look at the key changes and how these will affect both employers and employees.

Rest and Meal Breaks – Part 6D

Despite popular opinion the new Act does not do away with rest and meal breaks altogether. Instead, the changes provide more flexibility in the workplace.

Rather than specifying entitlements by reference to hours worked, the amendments require the employer to provide the employee with a ‘reasonable opportunity’ for ‘rest, refreshment and attention to personal matters’. This requires the employer and employee to consider the nature of the work and negotiate about when the employee can take their breaks. The employer must provide the employee with a reasonable opportunity to negotiate (so consultation will be key). If agreement cannot be reached, the employer has an overriding discretion to implement a rest and breaks structure for that employee, provided it is reasonable.

The obligation to provide breaks does not have to be met where the employer cannot reasonably do so, having regard to the nature of the employee’s work. Using an example from the retail sector, an employee who works in sole charge of a shop will not need to be provided with breaks. However, the employer must reasonably compensate the employee in lieu of rest and meal breaks.

In all workplaces, an employee can also agree to forgo rest and meal breaks for compensation.

These changes may provide employers with an opportunity to introduce greater flexibility into their workplace, or redesign current roster systems, but they will need to negotiate properly and fairly with their employees. Employers will also need to keep in mind their health and safety duties to employees and others in or around the workplace who may be impacted by their employees’ work.

Collective Bargaining

One of the more significant changes is that parties to collective bargaining are no longer required as a matter of good faith to conclude a collective agreement. This amendment aims to prevent bargaining becoming unnecessarily protracted and costly.

A related change is that the Authority will be able to declare that bargaining has concluded (this does not apply where one party has acted in bad faith). Neither party will then be able to reinitiate bargaining for 60 days after the declaration, without agreement from the other party.

Other changes include:

Employers are able to opt out of bargaining for a multi-employer collective agreement by providing written notice within 10 days of bargaining being initiated.

Employers can also initiate bargaining at the same time as unions. Previously, unions had a head-start window in the timing to initiate bargaining and the changes now align the timeframes to remove that timing advantage.

New employees will no longer automatically be employed under a collective agreement for the first 30 days, where there is one covering the work they are being employed to do. This amendment allows employers and employees more flexibility to negotiate individual terms and conditions of employment that will apply from the outset, regardless of whether a collective agreement is in place for that work. This change also deals with a grey area relating to the enforceability of trial periods for employees initially covered by a collective agreement.

Industrial Action

Most strikes and lockouts will now require advance written notice (there is no minimum period of notice specified in the Act). This must cover the nature of the proposed strike or lockout, whether it will be continuous, where and when it will begin, and when it will end.

Employers will also be able to make partial deductions of pay where employees take partial strike action (that is, they do not strike by stopping work but strike by means such as a go-slow or refusing to perform certain tasks). This will be either a fixed deduction of 10%, or a proportionate pay deduction for time lost, using the formula in the Act.

Good Faith

In response to the Employment Court’s decision in the Vice-Chancellor of Massey University v Wrigley case, the good faith provisions of the Act have been amended, although the extent of the change is not as significant as was signalled in the first version of the Bill. The changes will enable an employer proposing a decision likely to affect an employee’s continued employment to withhold confidential information in a wider range of circumstances. In particular, the employer will be able to withhold information where there is a mutual understanding (whether express or implied) of secrecy. However, the express provision in the Bill that would have allowed an employer to withhold evaluative material was removed before the second reading. Further, the exception allowing withholding of information about individuals other than the affected employees has been narrowed, and will now apply only where disclosure would be an ‘unwarranted disclosure’ of the other person’s affairs.

The effect of this is that unless there is an actual mutual understanding of secrecy, employers may well have to disclose information about other employees.

Flexible Working Arrangements

Flexible working arrangements will now be extended to all employees: previously they were restricted to those with caring responsibilities. Employees no longer have to be employed for six months to qualify, and are able to make as many requests within a 12 month period as they wish. Employers now have only one month to respond to any requests (rather than three).

Part 6A – Continuity of employment

Part 6A has been amended in a number of respects. These include:

Employers with fewer than 20 employees are exempt from the ‘vulnerable employee’ provisions in Part 6A, provided they give a warranty about the number of people they employ.

Employees entitled to elect to transfer to a new employer in a restructure must notify the incoming employer of their election within 5 working days of being advised of their right to transfer, and being provided with the required information.

Employers are allowed to negotiate the apportionment of service related entitlements they will have to pay. However, where the parties cannot agree, a default formula applies, where the outgoing employer is liable for holiday pay and the incoming employer is liable for sick pay.

The outgoing employer is subject to an implied warranty that they have not changed terms and conditions of their affected employees’ employment prior to the transfer without good reason. This seeks to restrict outgoing employers from amending their employees’ employment terms for the purpose of adversely affecting the incoming employer’s business. Any breach could lead to a damages award.

The outgoing employer must provide individualised employee information to the new employer (as well as more generalised employee transfer costs information).

Speeding up Employment Relations Authority determinations

The Employment Relations Authority (‘Authority’) will now be required to give an oral determination, or an oral indication of its preliminary findings, at the conclusion of the investigation hearing. It must then follow up with a written determination within three months of the investigation meeting (or receipt of the last information or submissions from the parties, if later).

This may encourage parties to reach a settlement between an oral determination or indication being made, and the written determination being issued.

What this means for your organisation

The Employment Relations Amendment Act 2013 may provide significant opportunities for employers to modernise their workplace. Employers may want to change the dynamic of their workplace with increased flexibility through the amendments to rest and meal breaks or flexible working arrangements. To do so may require employers to update their policies or amend their employment agreements in order to take advantage of these amendments. Some immediate changes you may want to consider are:

Removing any reference to the 30-day rule from the template employment agreements and negotiating its removal from collective agreements when they are up for renegotiation;

Removing prescriptive references to breaks in employment agreements for new employees; and

Look to negotiate with existing employees around possible changes.

Employers may also want to take advantage of the new collective bargaining framework as it will apply to on-going collective bargaining. However, understanding your rights and obligations under the new amendments is crucial to avoiding problems down the track.As always, the duty of good faith continues to underpin all our employment relationships so an employer must go about introducing any changes following a fair and reasonable process. As a minimum, any such process will include genuine consultation and some changes will also require agreement of the other parties in the employment relationship.

Start a conversationIf you are interested in making changes to your workplace please feel free to contact one of our employment law experts.